Buy vs. Rent: These Days, Buying Wins

Real Estate Agent with Remax of Joliet

Buy vs. Rent: These Days, Buying Wins

Source: CNN Money | May 13, 2011

For the first time in years, buying a home may beat renting. Two factors are at play, according to researchers who recently crunched the numbers, Ken Johnson of Florida International University and Eli Beracha of East Carolina University for a paper to be published in Real Estate Economics. First, rents, though mostly stagnant the past few years, are expected to head higher as more people bitten by the housing bust turn to renting. Rents could rise 7% in each of the next two years, according to Peggy Alford, president of Second, home prices have finally dropped enough to create a buying opportunity. The net result is that home price gains would need to average only 3.25% annually to beat renting, according to Beracha and Johnson. Even in cities where people are, theoretically, better off renting, they may not be in reality. Paying off a mortgage is a forced savings plan, said Baker. The mortgage bill comes in every month, the homeowner pays it and the mortgage balance goes down. Renters, meanwhile, are just as likely to spend their savings. They'll wind up with less money than homeowners. [Read this article]

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